Two SEC attorneys have resigned following controversy in the regulator’s lawsuit against crypto firm DEBT Box.
Bloomberg reported on April 22 that Michael Welsh and Joseph Watkins, who served as lead SEC attorneys on the ongoing case, resigned in April. The regulator reportedly planned to fire both lawyers if they did not resign.
Bloomberg said neither Welsh nor Watkins responded to its request for comment. The SEC and a union representative also declined to comment.
Neither person updated their LinkedIn page to acknowledge the resignation. The two worked as trial attorneys at the SEC for about 18 months.
DEBT Box Case
Welsh and Watkins’ handling of the DEBT Box case caused enormous controversy due to inaccuracies in the information they presented in court to successfully obtain a temporary restraining order and asset freeze against the company.
Subsequent investigation revealed that SEC counsel made false and misleading statements to justify the request, including falsely suggesting that Debt BOX had closed accounts 48 hours before a hearing.
The SEC admitted wrongdoing in December 2023 and tried to drop the case in January. Schuld BOX later contested the attempted dismissal.
Judge Robert Shelby chastised the SEC in March for abuse of power and forced the agency to pay legal fees in the case.
Further departure unlikely
The resignations of each lawyer are notable because of a separate, apparently unfounded rumor that SEC Chairman Gary Gensler plans to resign.
FOX Business reporter Eleanor Terret dispelled the rumor. She said Gensler could lose his position as SEC chairman in the upcoming U.S. elections, but is unlikely to step down voluntarily because he likes the position.
She added that the White House would likely ban Gensler from resigning due to the difficulty of naming a replacement at this time.
Terret added that SEC Commissioner Caroline Crenshaw’s term expires in June, and there is no information indicating her position will be extended. However, the SEC has not yet commented on the matter.